Nonfarm payrolls for March underperformed expectations, but the market didn’t even blink. The economy added 126,000 jobs, nearly half the projection of an increase of 240,000. The miss relative to the consensus was the biggest since the recession, and the actual monthly gain was the weakest in more than a year.
The lack of a negative market reaction (generally otherwise expected) stems from the increased probability that the U.S. Fed should be in much less of a hurry to raise rates. If policymakers do move to raise, the speed at which they increase, based on data, will likely be very moderate. Read more about No Growth? No Problem... Almost 04-09-15
What’s a company to do with all that cash? The answer to that question for many of the S&P 500 companies that currently sit on a combined record $1.4 trillion has been to make share repurchases. Stock buybacks hit an all-time high last year of $553 billion and undoubtedly contributed to the market’s positive return. We don’t know if corporations will match that pace this year, but it appears that we’re off to a good start in the first quarter.
Dividends, which are very near and dear to our hearts and have historically accounted for about a third of the market’s annual returns, have played second fiddle in corporate America’s plans to maximize shareholder value, though they have not been altogether overlooked. Read more about Cashing in with Dividends 04-02-15
In a speech earlier this week, Federal Reserve Vice Chairman Stanley Fischer said than “an increase in the target federal funds [rate] range likely will be warranted before the end of the year” and that should happen when “the expected return from raising the interest rate outweighs the expected costs of doing so.” In making the decision, “a wide range of information regarding labor market conditions, inflation, and financial and international developments” will be considered.
Read more about Economic News Fails to Support the Market 03-26-15
So far this year, U.S. equities are slightly positive, thanks in no small part to a strong showing yesterday. Considering the overall length of the current bull market, we cannot consider stocks’ year-to-day performance a bad result.
Stocks rallied Wednesday after the central bank’s Federal Open Market Committee (FOMC), as expected, dropped the word “patient” from its policy statement. Read more about Market Message from the Fed 03-19-15